(Rating: BUY, TP: Rs3,200, Upside: 7%)
Margin stability to sustain premium valuation; retain BUY
- Torrent seems to have dodged any further erosion in US business particularly when peers like ALPM and DRRD have been impacted; indeed, US sales have been trending in line with expectation
- With US decline exiting the base comparison from Q3, reckon drag on topline growth from other key markets - India, Brazil and Germany would recede.
- Entry into trade generics should not dilute margin over next 2 years at least as business would remain sub scale and unlikely to cannibalize chronic portfolio.
- Other expenses unlikely to revert to prior run rate. This results in better margin prognosis for current year than envisaged; - we note the contrast with other players like DRRD who have stepped up marketing investments in India though the product overlap with TRP is not material.
- Higher margin assumption drives slight increase in estimate; BUY stays with TP Rs3,200, based on unchanged 35x FY23 EPS.
Shares of TORRENT PHARMACEUTICALS LTD. was last trading in BSE at Rs. 3084.1 as compared to the previous close of Rs. 3003.75. The total number of shares traded during the day was 46565 in over 6628 trades.
The stock hit an intraday high of Rs. 3105.85 and intraday low of 2890. The net turnover during the day was Rs. 140756722.